Inflation takes a jump in April, but economists call sharp rise temporary

Washington watched closely the increase in consumer price inflation in April, but called it temporary. On a seasonally adjusted annual basis, April's consumer price index rose 7.2 percent.

''The main cause for the . . . increase in the inflation rate was gasoline prices,'' said White House spokesman Larry Speakes reassuringly. ''We believe this is a one-time effect based on the 5-cent tax increase. The underlying rate of inflation still remains low, and a one-month increase does not mean a long-term shift in inflation.''

Jerry Jafinowski, senior vice-president of the National Association of Manufacturers and the association's top economist, agreed. He called the April surge in the Labor Department's consumer price figures of ''little economic meaning'' because of the one-time impact of the higher federal gasoline tax.

American consumer prices rose 13.3 percent in 1979 and 12.4 percent in 1980. But last year the rise was only 3.9 percent. President Reagan cites this as a major achievement.

The April price figure shows that after an extraordinary four-month interval in which prices actually declined, they are up again. Aside from higher gasoline prices, rising food prices and other factors produced a 0.6 percent price surge. It's the biggest one-month consumer price jump since July's identical increase nine months ago.

The new consumer price index figure is 295.5. That means it costs about $2.95 to buy today what cost $1 in the government's sample ''market basket'' of goods and services in 1967. Some other items show sharp swings. Bad weather on both coasts made fruit and vegetable prices soar till April, but this rate of increase is now down dramatically, to 1 percent. Fresh vegetables measured alone have advanced 17.7 percent in the past two months.

Overall, prices of goods at grocery stores rose 0.4 percent, compared with March's 0.9 percent increase.

Entertainment costs dropped 0.1 percent, the first decline since April 1977, so hobbies will be a mite cheaper.

Medical care costs went up 0.5 percent, the same as March, the government says.

Most economists discount the new higher prices and wait further evidence. Is it a trend, they ask? The present guess is that 1983's inflation is around 4.5 to 5.5 percent, compared with last year's 3.9 percent.

The progress against inflation is not without its cost. Some economists say heavy unemployment (11.8 million in March) has helped keep prices down by reducing demand for goods and services.

You've read  of  free articles. Subscribe to continue.
QR Code to Inflation takes a jump in April, but economists call sharp rise temporary
Read this article in
QR Code to Subscription page
Start your subscription today